At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The following transactions were completed during April.
- Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30.
- Paid freight on Denton Co. purchase $60.
- Sold merchandise to members $900, terms n/30.
- Received credit of $40 from Denton Co. for a damaged racquet that was returned.
- Purchased tennis shoes from Newbee Sports for cash $300.
- Paid Denton Co. in full.
- Purchased tennis shirts and shorts from Venus's Sportswear $600, terms 2/10, n/60.
- Received cash refund of $50 from Newbee Sports for damaged merchandise that was returned.
- Paid freight on Venus's Sportswear purchase $30.
- Sold merchandise to members $1,000, terms n/30.
- Received $500 in cash from members in settlement of their accounts.
- Paid Venus's Sportswear in full.
- Granted an allowance of $30 to members for tennis clothing that did not fit properly.
- Received cash payments on account from members $500.
The chart of accounts for the tennis shop includes Cash; Accounts Receivable; Merchandise Inventory; Accounts Payable; Common Stock; Sales; Sales Returns & Allowances; Purchases; Purchase Returns and Allowances; Purchase Discounts; and Freight-in.
Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions.Complete the income statement through gross profit, assuming merchandise inventory on hand at April 30 is $2,296.